[Photo credit: Lending Memo]

Mainstream and behavioural economics are two sides of the same coin

The term ‘economics’ tends to incite a lot of passion. For many people it typifies a cold, emotionless perspective on life that just looks at money. It represents the cynical world view of those who, as Oscar Wilde said, “know the price of everything and the value of nothing”.

There are undoubtedly people — probably even economists — who do fit that description. But the idea that economics is all about bankers and big business, about commerce and making profits, is not just undeserved. It is also inaccurate. …

A Ludo board
A Ludo board

A board game with a small human illustrates how much emotions influence our decisions

The other day, Jenny and I played a game of Ludo with Luka. Its rules are simple enough to make it quite suitable for a five-year-old, even though some more strategic aspects are a bit beyond him. What I didn’t expect was the way in which it would capture some essential aspects of how we make decisions — and I am not thinking of game theory (which is outside my expertise anyway).

In case you are not familiar with Ludo (the name of which signifies “I play” in Latin), it goes as follows. Two, three or four players each have…

A dining room with tables dressed for a formal dinner
A dining room with tables dressed for a formal dinner
(featured image: UNC Greensboro/Flickr CC BY NC-ND 2.0)

One of our more intriguing and widespread beliefs is that when others appear to pay for something, it is actually free to us. But looks can be deceptive…

Imagine that you are retiring from a job at a large firm, and a dinner is organized in your honour. On the occasion you are presented with a final cheque, but the amount is rather lower than you expected. When you inquire about it, the explanation you receive is that the cost of the dinner has been deducted. How would you feel about that?

This is exactly what happened to economist Robin Hanson’s mother, according to a recent tweet. It did not provide any details, but let us assume that the cheque did not represent her final monthly wages (in…

“15% written on a blackboard)
“15% written on a blackboard)
(featured image: geralt via Pixabay)

If you buy something from a friend, you might ask them for a discount — but if you are selling them something, would you ask them for a higher price?

Humans are social animals. Our interactions with relatives and friends make this abundantly clear: all day long we do small — and sometimes large — favours to them (and they to us), we give and receive gifts, and we help each other out. We don’t even keep a tally, and yet almost everyone keeps at it. But, oddly, there is one favour that always goes in one direction. How come?

Commercial transactions are a key characteristic of our society: we work for money, and then we spend some of that money to buy the goods and services we need and…

A bunch of girls playing football
A bunch of girls playing football
(featured image credit: J Brandt/Flickr)

Football (or soccer), for many, produces such a powerful imagery and symbolism that we cannot help seeing it as a representation for bigger things — and that is what it is, warts and all

Let me begin by saying that I don’t think there is a problem with football per se. Certainly at a time when the sport has got much of Europe (in particular the country I live in) and South America under its spell, I would be loth to attract the attention of fans by suggesting there is something wrong with the game. And yet, I suspect that many devotees might share my reservations.

Last Wednesday morning, a BBC reporter reflecting on the Italy vs Spain semi-final in the Euro2020 football tournament described Spain as by far the better team throughout the…

A young injured blackbird perched on a ladder
A young injured blackbird perched on a ladder
Image via the author

What difference does our ethics framework make to anything, and what difference can we ourselves make to anything?

It was already past dinner time on this warm late spring day, but my friend and I were still playing on “the mountains”, the steep, wooded patch of land across the street from where I lived. And then we heard a subdued chirping, emerging from underneath a bush: a young blackbird, fallen from the nest we presumed, and clearly unable to fly. We carefully picked it up and took it to my house. Now what?

My grandma’s old canary cage served as a temporary home, and we found out from a friend of my parents’ that worms from the garden…

Brick wall
Brick wall
(featured image: Nicole Köhler/Pixabay)

How open is our mind, really?

A few days ago, a prominent economist posted a table on Twitter. In itself this was not a particularly remarkable event, were it not for the fact that it showed the top-10 “autocratizing” countries in the world alongside their per capita economic growth rate for the last 10 years, which — with the exception of one of them (Brazil) — exceeded the world average. And this observation caused some unrest.

The tweet was entirely factual, citing official growth rate figures and a table from Autocratization turns viral, the 2021 Democracy report of the Swedish V-Dem institute, an academic research organization…

A gantry above a smart motorway in the UK
A gantry above a smart motorway in the UK
Featured image: Department for Transport/Flickr CC-BY-ND 2.0

Is there a “natural” state of things that is inherently superior?

You’re happily driving along on the motorway. It is quite busy for a Tuesday afternoon, and there is a slight drizzle. Suddenly, the red engine management warning indicator on your dashboard comes on. You slow down and move towards the edge of the motorway… but there is no hard shoulder! You are on a “smart” motorway! Thankfully, there’s a refuge 200m ahead. But surely, this cannot be safe? A motorway without a hard shoulder, that is almost against nature, isn’t it?

Smart motorways were first introduced in 2006 in the UK. They don’t have much in the way of intelligence…

Five petrol hoses in different colours
Five petrol hoses in different colours
(Featured image: Roman K/Flicker CC BY-ND 2.0)

What money means in economic terms, and what it means to us, are two — or many more — different things

Imagine you have just spent £70 (€80, $95) on something, only to realize that what you have bought is going to be of no use, and that there is no way you can return it for a refund. It’s the kind of experience that would leave even a seasoned stoic a little upset. But why is this? Is that because of the magnitude of the amount, or is there more to it?

Money has the same value for everyone — a pound is a pound — and you can buy exactly the same thing with any pound. That characteristic essentially…

Close up of an old cash register/till
Close up of an old cash register/till
(featured image: David Trawin/Flickr CC BY-SA 2.0)

Are our principles absolute and unassailable, or are they for sale?

In Florida, the COVID-19 vaccination rate among the staff of nursing homes and other long-term care facilities is, by any standard, worryingly low, at barely 38%. Yet in one facility, more than 80% of the staff are fully vaccinated. This remarkable feat was achieved after management offered their people a bonus of $1000 ($100 upfront and the remainder as soon as at least 75% got their jabs). What is going on here?

Staff member Tammy Chandler had her doubts, in particular because she doesn’t quite trust such a new vaccine, but she concedes the bonus pulled her over the line…

Koen Smets

Accidental behavioural economist in search of wisdom. Uses insights from (behavioural) economics in organization development. On Twitter as @koenfucius

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